European Central Bank says distributed ledger could disintegrate the market

26 September 2016

Wide expansion of the distributed ledger technologies into the financial industry could ruin its integration and lead to fragmentation, as noted by the executive of the European Central Bank. He says that in view of its primitive shape distributed ledger faces significant regulatory, juristic, functionality and operation challenges that need to be addressed thoroughly.

He notes that the European financial system is not yet ready for large-scale integration of the distributed ledger into the market. Despite the fact that the ECB holds to a position of readiness for exploration and examination of the possibilities brought by the new technology, it admonishes about the implementation of the DLT in the private sector.

ECB executive points to the variety of modes to realize the distributed ledger projects which may lead to the fragmentation of the financial system. If the technology is standardized and integrated in undue time it would prevent steady operation of the Single Payment Area.

ECB is promoting the scheme of integrating the Target2 real-time gross settlement system with T2S, along with the other two key strategies: settlement of instant payments and expanding the supporting management system across the Europe.

Talking about instant payments the executive states that at the moment the ECB is making research to consider longer settlement operating time to enable payment settlements continue in real-time mode with the improved functionality of the Target2.